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New Storms, Prior Disasters Burden FEMA's Budget

FEMA Director William Craig Fugate speaks to the media as U.S. Homeland Security Secretary Janet Napolitano (left) and American Red Cross President and CEO Gail McGovern (right) listen after a meeting with President Obama at the White House earlier this month. Obama was briefed on the 2011 hurricane season.Getty Images

As the government copes with this spring's plague of tornadoes and flooding in the Midwest and South, it is still responding to disasters of previous years.

The Federal Emergency Management Agency continues to fund rebuilding projects related to Hurricane Katrina and other major storms in the past. This has caused some cash flow problems at FEMA.

In Laurel, Miss., Jones County Emergency Management Director Don McKinnon recently presided over a groundbreaking for an emergency hurricane shelter. It's designed to protect up to 1,000 people at a time in winds of up to 250 mph.

"We always have people evacuating from the coast, from our coast, from Louisiana, and we can't leave them in a car in a parking lot someplace, so we just never felt comfortable with trying to shelter these folks while they were in our care," McKinnon said. "This is going to meet that need."

The $2.5 million price tag for the structure is being picked up by FEMA.

In New Orleans, deputy mayor Cedric Grant says there's quite a bit of reconstruction still under way in his city, with funds provided by FEMA.

"They've provided some funding for pools and recreation centers and criminal justice facilities — it reaches the gamut," Grant says.

Throughout the Gulf Coast, FEMA is financing fire stations, sewers, roads and schools as the area continues to rebuild from the destructive storms of 2005.

"We're still, in many cases, even further back than Katrina, still rebuilding and paying for costs of recovery operations," says Craig Fugate, FEMA's administrator. "These are longer-term commitments that are ongoing in addition to the most recent disasters."

Under law, FEMA has the obligation not just to respond to emergencies in the moment but also to help communities rebuild over time.

"There are countless, probably over several hundred what we call 'open' disasters — that means they have happened over the past 10 to 15 years even — that FEMA is still reconciling the rebuilding of schools or the rebuilding of town halls, city halls, water treatment plants," says Barry Scanlon, a former FEMA executive, "and that can go on for some time."

The challenge for FEMA is funding the long-term projects while keeping enough cash on hand to respond to new disasters. Last summer, for instance, FEMA interrupted work on long-term projects in order to preserve a cushion for current disasters. The stoppage affected several projects in New Orleans, according to Deputy Mayor Grant.

"As I recall, there was maybe about a 90-day period where we were in some design, so maybe it affected us, a small bump in the road. But quite honestly, we worked through that," Grant says.

Last week, the House approved a bill that contains an extra $1 billion for FEMA's Disaster Relief fund, which Republicans and some Democrats say the Obama administration underfunded in its budget proposal. There is currently some $2.4 billion in the account.

Former FEMA official Dan Kaniewski says people in disaster-struck areas shouldn't worry, because the fund isn't going to run dry.

"It's more of a cash-flow issue," he says. "It's not something we should lay awake at night and say, 'Oh, my God, the disaster relief fund is going to be emptied for these long-term projects.' "

Should the disaster relief fund fall below $1 billion, says FEMA Director Fugate, long-term projects such as those related to Katrina will again be put on hold so that money is available for immediate needs.

It's already been a tough year, and officials are expecting an active hurricane season.

"Based upon what we've seen so far, and knowing what we have in the pipeline for things come due, where states are going to seek reimbursement, we don't see an immediate shortfall and we see nothing that really limits our response capabilities through this hurricane season," Fugate says.

That assumes that the bills for this spring's tornadoes and floods don't rise too high, and that there isn't another storm like Katrina.